Why all these talk about rice trade liberalization?

This refers to the news item titled “Judy won’t let solons get hold of CCT funds” (Front Page, 9/2/16).

We find excessive the monthly rice subsidy of “20-kilogram bags to 4Ps beneficiaries.” At the NFA (National Food Authority) price of P32.50 per kg, the rice dole will be worth P35.75 billion in 2017, representing nearly a third of the budget of the Department of Social Welfare and Development in 2017—P129.9 billion from the P110.9 billion this year. But as the P20-billion budget hike represents about half of the rice dole, other benefits under the conditional cash transfer (CCT) program could suffer from the setting aside of P35.75 billion for “rice subsidy.”

Based on a study by the Food and Nutrition Research Institute, the rice requirement under the 4Ps amounts to 14 kg a month per child. Not only that, the World Bank report in March 2012, titled “Who Benefits from Social Assistance in the Philippines?” is most telling: Based on NFA operations (2008-2009), “for every Php1.00 of rice subsidy, the government spent another Php6.84 just for the tax subsidy of importing the NFA rice.” A huge proportion (87 percent) of the cost of the rice subsidy program in those years went to “program  implementation” instead of going to the  intended beneficiaries.

Now comes the government economic team’s proposal to transfer the NFA’s commercial functions to the private sector. The DSWD, during calamities, sources the staple from the NFA. But will the private sector, which is principally profit-oriented, take a position that the “low grade” rice that the  NFA usually imports be made available at all times? Moreover, with the expiry of the  quantitate restrictions on rice (QR) on June 30, 2017, (“Gov’t to remove rice import quota next year,” News, 9/5/16), would private traders have the financial muscle to set aside P62 billion, the value of the NFA’s peak rice imports (2.4 million metric tons) in 2010? But the volume could be more with the resetting of the rice self-sufficiency goal from 2018 to 2022 with limited appropriation.

The NFA has a social mandate. As such, it should share its commercial functions with the private sector, confining its rice procurements only for the purpose of disaster-preparedness. These purchases should be stored in NFA warehouses nationwide.

Setting aside the rice-sufficiency program amid a looming trade liberalization scenario may not necessarily lead to significantly cheaper prices. With a palay output of only 16.2 million metric tons in 2007 (19 million metric tons in 2014), we were at the mercy of international traders. Significantly, production costs in Vietnam are reported to be skewed with the noninclusion (that is, “never calculated into costs”) of government subsidies in irrigation, inputs to boost rice production—subsidies that came from taxpayer money, in addition to the “five percent value-added tax (VAT) on rice sales.”

Some pencil-pushing shows that the retail price gap between low-grade NFA imported rice and locally produced quality rice is P10 per kg or just P1 per serving of cooked rice. Why not share our blessings with the poor tillers when so much is wasted on luxurious items? Why all these talk about trade liberalization on rice?
—MANUEL Q. BONDAD, Makati City